2 xy is the smallest spending share throughout the

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Unformatted text preview: ding share throughout the whole period, and can be negative. 3. Spending has been fairly constant, except in the early 1940s, when the increase in the government spending share resulted in a decline in the other three spending shares. Defining the Spending Shares 1. 2. 3. During 20002006, C/Y has been rising, while I/Y has been declining during the same period. During 20002006, G/Y increased from 17.5 percent to 19 percent. During the last 25 years, C/Y has been increasing, while X/Y has been negative and decreasing. The Consumption Share and the Real Interest Rate Consumption and the Real Interest Rate (Next slide) A higher interest rate today will increase the price of consuming today relative to the price of consuming tomorrow. This will decrease consumption today. A lower...
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